Hermès Asks Prosecutors to Investigate LVMH Stake Purchase

PARIS — Hermès International’s battle to stay independent of Bernard Arnault, the acquisitive boss of LVMH Moët Hennessy Louis Vuitton, took a nasty turn Tuesday when the luxury retailer revealed it had filed a criminal complaint over stealth stake-building by LVMH, and LVMH responded that it would sue for defamation.

Hermès, the maker of iconic silk scarves and Birkin handbags and one of the last great independent luxury houses, said it had asked prosecutors on July 10 to investigate “the terms of LVMH’s acquisition of stock in Hermès.” It is accusing LVMH of insider trading and share-price manipulation as it built its stake in Hermès from zero in 2000 to 17.1 percent in 2010.

Mr. Arnault acquired those shares with the aid of opaque financial instruments that allowed him to shield his growing acquisition from the market and from Hermès. LVMH has since raised its stake to more than 22 percent, giving it 16 percent of the voting rights.

The French market regulator, the Autorité des marchés financiers, or A.M.F., has been investigating the transactions in question since late 2010, and a spokeswoman for the prosecutor’s office told Reuters that the authorities were seeking the opinion of the market regulator before deciding whether to pursue a criminal investigation

The battle pits the Hermès family shareholders — the Puechs, the Guerrands and the Dumases — who hold most of the remaining shares, against Mr. Arnault, the richest man in France. The fashion magnate has made a career of swallowing up top luxury brands, but he has insisted that he is not seeking to take over Hermès.

Hermès, which this year celebrated its 175th year in business, has repeatedly asked him to show his good intentions by reducing his stake. To ensure that Mr. Arnault cannot further increase his portion, the family created a holding company giving it the first right to buy any shares that family members choose to sell.

In a statement, LVMH on Tuesday accused Hermès of seeking “to bypass the appropriate A.M.F. channels without waiting for the result of the official enquiry and without determining the extent of the A.M.F.’s findings to date.”

LVMH insisted that “the acquisition of its stake in Hermès was entirely legitimate” and that it “has no doubt that the enquiry will determine that the Hermès allegations are false and serve no other purpose than to slander and unlawfully undermine another firm in the same industry.”

It added: “As a result, the LVMH Group has had no choice but to file a suit for slander, blackmail and unfair competition.”